Thank you.
I want to say welcome to the Office of the Auditor General. Auditor General, it's always a pleasure to see you. I want to thank you again for the thoroughness and diligence with which you do your job.
I'm going to focus my questioning on two of the chapters, and I think my colleague will probably look at some of the others. I'm going to focus first on chapter 3, on small and medium enterprises; then, when the clerk gives me the signal, I'll move over to chapter 2, on Governor in Council appointments.
On the first one, I have a real concern that previous recommendations are not being followed and that there's a large potential for unreported revenue. We see that in previous unsatisfactory reports progress has not been made in some of the key areas aimed at improving how the agency assesses the risk of non-compliance, and also with targeted files for audit of unreported income, and also that the core audits are not addressed.
We see that 50% of the audits over the five past years are still not detecting unreported income and that the amount of unreported income has continued to be constant at about $500 million. Staff are still looking at low-risk files: 56% of the files that are audited are still only returning about 39% of the tax revenue. Staff are not using the agency's computerized risk assessment system. They have failed to strengthen the core audits. And they're not targeting audits—and we know that targeted audits are four times more effective.
I would like to ask you for some of the reasons why the staff are still proportionately auditing the low-risk files that probably don't generate as much as some of the higher-risk files do. We know that 56% of the files return only 39% of the tax recoveries.
Also, in dollar figures, what do you think is being missed by going after the low-hanging fruit of these low-risk files while some of the high-risk non-compliants are relatively untouched? How much unreported revenue do you think we're leaving on the table?